The World Bank said on Wednesday that remittances sent home by migrants from low- and middle-income countries are expected to drop around 20 percent this year amid the global economic slowdown caused by the novel coronavirus.
The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country, the report says.
Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 percent to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households.
The flow of remittances to poorer countries in Europe and Central Asia is expected to drop 27.5%, followed by sub-Saharan Africa with 23.1%, South Asia at 22.1%, the Middle East and North Africa at 19.6%, Latin America and the Caribbean with 19.3% and East Asia and the Pacific with 13%.
Remittances to countries in Europe and Central Asia remained strong in 2019, growing by about 6 percent to $65 billion in 2019. Ukraine remained the largest recipient of remittances in the region, receiving a record high of nearly $16 billion in 2019. Smaller remittance-dependent economies in the region, such as Kyrgyz Republic, Tajikistan, and Uzbekistan, particularly benefited from rebound of economic activity in Russia. In 2020, remittances are estimated to fall by about 28 percent due to the combined effect of the global coronavirus pandemic and lower oil prices.
Remittances last year became a larger source of funds for poorer nations than foreign direct investment, Remittances reached a record $554 billion in 2019, a number that may have been ever larger due to the flow of remittances through informal channels like cash carried by hand. Foreign direct investment to developing countries is expected to drop 35 percent this year, the World Bank said.
The World Bank recommended that governments and businesses work to protect immigrants from the economic and health effects of the coronavirus, saying migrant laborers were often excluded from programs meant to cushion the effects of the pandemic. And it encouraged states and companies to lower the costs of sending money home.
